The federal government reported $161.8 billion in improper payments during the most recent fiscal year, according to a new watchdog report.
Improper payments have been a significant issue for the federal government, with executive branches reporting an estimated $2.8 trillion in improper payments since 2003, according to a report from the U.S. Government Accountability Office. The report found a total of $161.8 billion in improper payments in 2024 alone. That figure is likely an undercount because not all federal agencies follow reporting guidelines.
Under the Payment Integrity Information Act, agencies are required to manage payments by identifying risks, taking corrective measures, and reporting on their efforts. However, the GAO found that some agencies are not fully following the required guidelines for reporting data annually.
Improper payments have declined in recent years, costing the government $239 billion in 2023 before dropping to $161.8 billion in 2024. Improper payments remain a stubborn challenge for many federal agencies. Improper payments peaked at $281.4 billion in fiscal year 2021 during the COVID-19 pandemic.
The 2024 cost of improper payments, $161.8 billion, would be enough for the U.S. Marines to buy nearly 2,000 V-22 Osprey helicopters at $71.3 million a piece. The V-22 Osprey is a combat aircraft designed to combine the vertical performance of a helicopter with the speed and range of a plane.
The GAO did the study as part of a mandate under House Report 117-389, which requires quarterly updates on improper payments. This is the eighth report by the GAO and focuses on evaluating the roles the Office of Management and Budget and the Inspector General play in enforcing agencies to address, adapt, and develop plans that meet the law’s requirements.
According to the report, in 2023, the IG’s report showed that 10 federal agencies under the Chief Financial Officers Act were noncompliant in fiscal year 2022. Additionally, nine of these agencies failed to meet standards for the same programs in 2021 and 2022.
Agencies that remain noncompliant with payment integrity standards for two or more consecutive years must submit additional proposals to the Office of Management and Budget. OMB is key in dealing with improper payments and outlining improvement plans.
The plans must be included in the agency’s annual budget submission and posted to PaymentAccuracy.gov, a government website created to provide transparency and track efforts to identify, improve, reduce, and prevent improper payments.
Improper payments occur when funding is distributed to the wrong recipient, lacks proper documentation. Improper payments also include payments that “should not have been made or that were made in an incorrect amount.”
While not all improper payments result in fraud, the report underscores the need for better internal controls to prevent more errors and reduce the amount of taxpayer dollars wasted.
GAO recommended that OMB ensure that noncompliant agencies explicitly include plans of improvement and plans to achieve compliance in their annual financial statements, post the plans on PaymentAccuracy.gov, or communicate them directly to the relevant congressional committees. OMB agreed with the recommendations.
